LEGISLATIVE WATCH
Consensus Needed to Modernize Milk Pricing The National Milk Producers Federation’s (NMPF) work is informed by the lessons of the past two years, which have been challenging for our industry, to say the least. That experience is a major – but far from the only – motivator behind a significant undertaking of 2022: Working to modernize the Federal Milk Marketing Order (FMMO) system. producers and consumers, and that accounts for the unique needs of producers and cooperatives through a referendum process to approve any proposed changes.
JIM MULHERN
F
MMOs, the bedrock of orderly milk marketing, showed signs of stress during the pandemic and are ripe for review after more than two decades without any significant updates. NMPF is the natural leader of this discussion and the logical place to formulate a plan. But it’s critical, as serious discussions get underway for what would be the first major changes to FMMOs since 2000, to understand what the conversation needs – and what it doesn’t. First: We support federal marketing orders, which have promoted orderly milk markets for nearly a century. A well-functioning federal order system at its best works as a model of the industry itself, providing a fair and transparent program that benefits
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milk messenger
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And just as the industry changes, the FMMO system must adapt to reflect the new realities in today’s milk markets. The reasons for modernization are many. The current Class I mover needs to be reviewed, as $750 million in farmer revenue losses during the second half of 2020 compared to the previous mover formula attests. Make-allowances that address the cost of processing milk into manufactured products haven’t been changed in years and may need adjustment, as suggested in a recently
released, USDA-commissioned study. The average fat and protein levels in milk from the farm are higher today than they were in 2000, but current federal pricing formulas don’t accurately reflect this increased component content. These are only a few top-line concerns from a much longer list. Many recent headaches for farmers over the past several years, from the block/barrel spread to negative PPDs and the resultant widespread de-pooling were in part an effect of federal orders, but not caused by them; and tweaks to the program could have positive impacts that ameliorate these types of issues in the future. In response, NMPF has been taking the lead in delving deeply into these and other issues, convening its Economic Policy Committee and Board of Directors to examine the critical issues and determine those best addressed through a national marketing-order hearing and which may be separate issues or ones best addressed through regional order hearings. We’ve spent the past several months soliciting farmer and co-op
